Yen Firms on BOJ's Open-Ended Asset Buying Pledge for 2014

Tuesday, 22 Jan 2013 | 1:26 AM ETReuters

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The yen briefly fell against the dollar on Tuesday after the Bank of Japan surprised markets by adopting an open-ended commitment to buy assets, but later regained ground as the new scheme for additional purchases only comes into effect next year.

The BOJ, which has been under intense political pressure to overcome deflation, also doubled itsinflation target to 2 percent as had been widely expected.

The dollarrose to as high as 90.18 yen right after the BOJ's decision, nearing a 2-1/2 year high of 90.25 yen that had been set on Monday.

The greenback, however, later sagged back down and last fetched 89.19 yen, down 0.5 percent on the day.

The BOJ met expectations by setting a 2 percent inflation target and delivered a surprise by adopting the open-ended pledge to buy assets, said Roy Teo, FX strategist for ABN AMRO Bank in Singapore.

Still, one point to note is that asset buying under the open-ended pledge is only set to start from 2014, he said.